The promotion of Renewable Energies in Germany

The Federal Government has internationally committed itself to reduce Germany’s emissions of greenhouse gases by 40 percent by 2020. To contribute to this objective, the renewable energy sector aims to account for a 47 percent share of electricity consumption by the end of the decade. In the heat and in the road transport sector, the aim of the renewables industry is to contribute 25 percent and some 22 percent from renewable sources respectively by then. Various instruments are used to promote and implement these objectives.

In the electricity sector, the Renewable Energy Sources Act (EEG) is the basis for the development of renewable energy. Its feed-in tariffs (FITs) guarantee the purchase of electricity from hydro power, wind and solar energy, biomass and geothermal energy. FITs are paid for a period of 20 years for each kilowatt hour fed into the grid. Incentives for innovation and increased efficiency are set by the gradual reduction of those rates for new installations.

Heating with renewable energy is promoted by means of the Market Incentive Programme (MAP). A so-called "climate premium" is paid to successful applicants who install a solar heating system, a wood pellet or firewood stove or a geothermal energy probe. The grant varies depending on the size and quality of the system. Low-interest loans are issued by the Kreditanstalt für Wiederaufbau (KfW)). Since 2009, the "Renewable Energy Heat Act" specifies a certain minimum share of renewables for newly constructed buildings.

The use of biofuels in the transport sector is currently promoted by an obligation requiring the use of biofuels. This obligation is usually met by blending biofuels to fossil fuels. The tax incentive for pure biofuels have been withdrawn. A biofuel quota has been set for the whole fuel market which must be fulfilled. According to EU law, the share of renewables in the transport sector is to be increased to 10 percent by 2020.

From 2015, the so called decarbonisation strategy is to be implemented in Germany. The biofuel quota (currently 6.25 percent) will then be replaced by a greenhouse gas savings quota of 3 percent. This quota will rise to 7 percent by 2020.